Spanish Broadcasting System, Inc. Reports Results for the First Quarter 2009

Spanish Broadcasting System, Inc. Reports Results for the First Quarter 2009

COCONUT GROVE, Fla., May 15 /PRNewswire-FirstCall/ -- Spanish Broadcasting System, Inc. (the "Company" or "SBS") (NASDAQ:SBSA) today reported financial results for the first quarter ended March 31, 2009.

Discussion and Results

Raul Alarcon, Jr., Chairman and CEO, commented, "We made considerable progress in reducing our costs during the quarter, significantly offsetting the impact of the global economic recession and bleak U.S. advertising market. MegaTV generated another healthy revenue increase, as we continued to expand and monetize our growing TV audience. Our radio operations reported reduced revenues, despite continued strong audience shares, reflecting the ongoing industry-wide advertising downturn. Looking ahead, our ability to deliver Hispanic audiences to national and local advertisers in the nation's top markets has never been stronger. We will continue to support our station brands, while aggressively controlling our costs, with the goal of positioning our assets for growth over the long-term."

Quarter Results

For the quarter ended March 31, 2009, consolidated net revenue totaled $27.8 million compared to $36.4 million for the same prior year period, resulting in a decrease of $8.6 million or 24%. This consolidated decrease was attributable to our radio segment which had a net revenue decrease of $8.8 million or 27%, offset by an increase in our television segment net revenue of $0.2 million or 6%. Our radio segment had a decrease in net revenue primarily due to lower local and national sales caused mainly by the decline in economic conditions. The decrease in local sales occurred in all of our markets, with the exception of our Chicago market. The decrease in national sales occurred in all of our markets. Our television segment continues to increase its advertising and content demand as MegaTV continues to increase its viewership.

Operating income (loss) before depreciation and amortization, gain on the disposal of assets, net, and impairment of FCC broadcasting licenses and restructuring costs, a non-GAAP measure, totaled $2.6 million compared to $(1.4) million for the same prior year period, representing an increase of $4.0 million. This increase was primarily attributed to the decreases in station operating expenses of $11.9 million and corporate expenses of $0.7 million, offset by a decrease in net revenue of $8.6 million. Please refer to the Segment Data and Non-GAAP Financial Measures section for definitions and a reconciliation of GAAP to non-GAAP financial measures.

Operating loss totaled $(9.7) million compared to $(2.8) million for the same prior year period. The increase in operating loss was mainly due to the impairment of FCC broadcasting licenses and restructuring costs of $10.6 million. Also contributing to the increase in operating loss was a decrease in our net revenue, offset by decreases in our station operating expenses and corporate expenses. Please refer to the Impairment of FCC Broadcasting Licenses and Restructuring Costs section for a detailed discussion.

Loss before income taxes totaled $(13.2) million compared to $(5.9) million for the same prior year period.

Impairment of FCC Broadcasting Licenses

As a result of the SFAS No. 142 impairment testing of our indefinite-lived intangible assets and goodwill, we recorded a non-cash impairment loss of approximately $10.1 million that reduced the carrying values of our FCC broadcasting licenses in our Chicago and San Francisco markets. The impairment loss was due to changes in estimates and assumptions which were primarily: (a) lower industry advertising revenue growth projections in our respective markets, and (b) lower industry profit margins.

Restructuring Costs

As a result of the decrease in the demand for advertising and the continued deterioration of the economy, we began to implement a restructuring plan in the third quarter of fiscal year 2008 to reduce expenses throughout the Company and have incurred costs totaling $3.0 million to date, which includes $0.5 million for the three-months ended March 31, 2009, related to the termination of various programming contracts and personnel. In addition, we are reviewing further cost-cutting measures, as we continue to evaluate the scope and duration of the current economic slowdown and its anticipated impact on our operations.

About Spanish Broadcasting System, Inc.

Spanish Broadcasting System, Inc. is the largest publicly traded Hispanic-controlled media and entertainment company in the United States. SBS owns and/or operates 21 radio stations located in the top Hispanic markets of New York, Los Angeles, Miami, Chicago, San Francisco and Puerto Rico, including the #1 Spanish-language radio station in America, WSKQ-FM in New York City, as well as 4 of the Top 8 rated radio stations airing the Tropical, Mexican Regional, Spanish Adult Contemporary and Hurban format genres. The Company also owns and operates Mega TV, a television operation serving the South Florida and Puerto Rico markets, with national distribution through DirecTV Mas and various over-the-air affiliates. SBS also produces live concerts and events throughout the U.S. and Puerto Rico. In addition, the Company operates www.LaMusica.com, a bilingual Spanish-English online site providing content related to Latin music, entertainment, news and culture. The Company's corporate Web site can be accessed at www.spanishbroadcasting.com.

This press release contains certain forward-looking statements. These forward-looking statements, which are included in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this press release. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that actual results will not differ materially from these expectations, and the Company disclaims any duty to update any forward-looking statements made by the Company. From time to time, these risks, uncertainties and other factors are discussed in the Company's filings with the Securities and Exchange Commission.

(Financial Table Follows)

Below are the Unaudited Condensed Consolidated Statements of Operations and other information as of and for the quarter ended March 31, 2009 and 2008.

                                         Quarter Ended March 31,   Amounts in thousands                      2009      2008                                               (Unaudited)   Net revenue                            $27,794    36,433   Station operating expenses              22,367    34,243   Corporate expenses                       2,861     3,593   Depreciation and amortization            1,593     1,362   Loss (gain) on the disposal of    assets, net                                11        (3)   Impairment of FCC broadcasting    licenses and restructuring costs       10,616         -     Operating loss                        (9,654)   (2,762)   Interest expense, net                   (6,417)   (5,084)   Changes in fair value of derivative    instrument                              2,856         -   Other income, net                            -     1,928    Loss before income taxes               (13,215)   (5,918)   Income tax (benefit)                    (2,269)        -     Net loss                             (10,946)   (5,918)    Dividends on Series B preferred    stock                                  (2,482)   (2,417)     Net loss applicable to common      stockholders                       $(13,428)   (8,335)    Net loss per common share:     Basic and Diluted                     $(0.19)    (0.12)    Weighted average common shares    outstanding:     Basic and Diluted                     72,502    72,405    Non-GAAP Financial Measures   

Included below are tables that reconcile the quarter ended reported results in accordance with Generally Accepted Accounting Principles (GAAP) to Non-GAAP results. The tables reconcile Operating Income (Loss) to Operating Income before Depreciation and Amortization, Loss (Gain) on the Disposal of Assets, net, and Impairment of FCC Broadcasting Licenses and Restructuring costs.

   UNAUDITED GAAP REPORTED RESULTS RECONCILED TO NON-GAAP RESULTS                                          Quarter Ended March 31,      %   (Amounts in millions)                2009                2008   Change    Operating Income (Loss)             $(9.7)               (2.8)   add back: Loss (gain) on the    disposal of assets, net                -                   -   add back: Impairment of FCC    broadcasting licenses and    restructuring costs                 10.6                   -   add back: Depreciation &    amortization                         1.7                 1.4   Operating Income (Loss) before    Depreciation & Amortization,    Loss (Gain) on the Disposal of    Assets, net, and Impairment of    FCC Broadcasting Licenses and    Restructuring  Costs                $2.6                (1.4)    N/A   

Operating Income before Depreciation and Amortization, Loss (Gain) on the Disposal of Assets, net, and Impairment of FCC Broadcasting Licenses and Restructuring costs are not measures of performance or liquidity determined in accordance with GAAP in the United States. However, we believe that these measures are useful in evaluating our performance because they reflect a measure of performance for our stations before considering costs and expenses related to our capital structure and dispositions. These measures are widely used in the broadcast industry to evaluate a company's operating performance and are used by us for internal budgeting purposes and to evaluate the performance of our stations, segments, management and consolidated operations. However, these measures should not be considered in isolation or as substitutes for Operating Income, Net Income (Loss), Cash Flows from Operating Activities or any other measure used in determining our operating performance or liquidity that is calculated in accordance with GAAP. In addition, because Operating Income (Loss) before Depreciation and Amortization, Loss (Gain) on the Disposal of Assets, net, and Impairment of FCC Broadcasting Licenses and Restructuring costs, is not calculated in accordance with GAAP, it is not necessarily comparable to similarly titled measures used by other companies.

Unaudited Segment Data

We have two reportable segments: radio and television. The following summary table presents separate financial data for each of our operating segments (in thousands):

                                     Quarter Ended                                        March 31,           Change                                    2009       2008       $         %   Net revenue:     Radio                        $24,176     33,026   (8,850)    (27%)     Television                     3,618      3,407      211       6%       Consolidated               $27,794     36,433   (8,639)    (24%)    Operating income before    depreciation and    amortization, loss (gain) on    the disposal of assets, net,    and impairment of FCC    broadcasting licenses and    restructuring costs:     Radio                         $7,633      5,888    1,745      30%     Television                    (2,206)    (3,698)   1,492     (40%)     Corporate                     (2,861)    (3,593)     732     (20%)       Consolidated                $2,566     (1,403)   3,969    (283%)   Depreciation and    amortization:     Radio                           $813        796       17       2%     Television                       538        167      371     222%     Corporate                        242        399     (157)    (39%)       Consolidated                $1,593      1,362      231      17%   Loss (gain) on the disposal    of assets, net:     Radio                            $(8)        (3)      (5)    167%     Television                        19          -       19     100%     Corporate                          -          -        -       0%       Consolidated                   $11         (3)      14    (467%)   Impairment of FCC    broadcasting licenses and    restructuring costs:     Radio                        $10,548          -   10,548     100%     Television                        24          -       24     100%     Corporate                         44          -       44     100%       Consolidated               $10,616          -   10,616     100%   Operating (loss) income:     Radio                        $(3,720)     5,095   (8,815)   (173%)     Television                    (2,787)    (3,865)   1,078     (28%)     Corporate                     (3,147)    (3,992)     845     (21%)       Consolidated               $(9,654)    (2,762)  (6,892)    250%    Selected Unaudited Balance Sheet Information and Other Data:                                                As of March 31,   (Amounts in thousands)                         2009    Cash and cash equivalents                   $33,936    Total assets                               $472,690    Senior secured credit revolver due    2010                                       $15,000   Senior secured credit facility term    loan due 2012                              312,000   Other debt                                    7,381     Total debt                               $334,381    Series B preferred stock                    $92,349    Total stockholders' deficit                $(49,482)    Total capitalization                       $377,248                                                Fiscal Year Ended March 31,   (Amounts in thousands)                         2009         2008    Capital expenditures                           $289        5,013   Cash paid for income taxes, net                 $22           10  

First Call Analyst:
FCMN Contact:

Source: Spanish Broadcasting System, Inc.

CONTACT: Analysts and Investors, Joseph A. Garcia, Chief Financial
Officer, Chief Administrative Officer, Senior Executive Vice President and
Secretary, +1-305-441-6901; or Analysts, Investors or Media, Chris Plunkett of
Brainerd Communicators, Inc., +1-212-986-6667

Web Site: http://www.spanishbroadcasting.com/

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Profile: International Entertainment